Ethereum has been underperforming lately, leaving investors wondering if its days as a top cryptocurrency are numbered.
Weak Fundamentals
- Ethereum’s price has been stuck around $3,100, showing a lack of upward momentum.
- The cryptocurrency is closely tied to Bitcoin but has been underperforming despite Bitcoin’s record highs.
- Ethereum’s failure to deliver timely upgrades, such as reducing high gas fees, has dampened demand.
- Other Layer 1 networks, like Solana, have gained users at Ethereum’s expense.
Spillover Effect on Bitcoin
- Ethereum’s weak fundamentals are affecting Bitcoin by preventing new money from flowing into the crypto market.
Declining Stablecoin Usage
- Ethereum used to dominate stablecoin transactions but has lost market share to networks like Tron due to high fees.
Inflationary Issuance
- Ethereum’s issuance has become inflationary again, with more ETH being issued than burned.
- Staking rewards have also dropped, reducing bullish sentiment.
Bearish Outlook
- Given these developments, analysts believe it’s better to bet against Ethereum (short) rather than for it (long).
- Ethereum’s fragile fundamentals are not yet fully reflected in its price, which could lead to a potential crash.
